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Human Resource
Management
1

ELEVENTH EDITION

GARY DESSLER

Part 4 | Compensation

Chapter
11

Establishing Strategic Pay...
After studying this chapter, you should be able to:
1. List the basic factors in determining pay rates.
2. Explain in deta...
Basic Factors in Determining
Pay Rates
Employee
Compensation

Direct Financial
Payments

© 2008 Prentice Hall, Inc. All
ri...
Legal Considerations in Compensation
Davis-Bacon Act (1931)

Equal Pay Act (1963)

Walsh-Healey Public
Contract Act (1936)...
Equity and Its Impact on Pay Rates

Forms of Equity

External
Equity

Internal
Equity

© 2008 Prentice Hall, Inc. All
righ...
Addressing Equity Issues
Salary Surveys

Methods to
Address Equity
Issues

Job Analysis and
Job Evaluation

Performance Ap...
The Salary Survey

Step 1. The Wage Survey:
Uses for Salary Surveys

To price
benchmark
jobs

To marketprice wages
for job...
Sources for Salary Surveys

Sources of Wage and
Salary Information

Employer SelfConducted
Surveys

Consulting
Firms

Prof...
Establishing Pay Rates (cont’d)
Skills

Step 2. Job Evaluation:
Identifying
Compensable Factors

Effort

Responsibility

W...
Establishing Pay Rates (cont’d)
Methods for
Evaluating Jobs

Ranking

Job
Classification

© 2008 Prentice Hall, Inc. All
r...
Establishing Pay Rates (cont’d)

Point Method
Step 3. Group
Similar Jobs
into Pay Grades

Ranking Method

Classification M...
Pricing Managerial and Professional Jobs
Compensating Executives
and Managers

Base
Pay

Short-term
Incentives

© 2008 Pre...
Competency-Based Pay (cont’d)
Why Use CompetencyBased Pay?

Support HighPerformance
Work Systems

Support
Strategic Aims

...
Other Compensation Trends
• Broadbanding
 Consolidating salary grades and ranges into just a

few wide levels or “bands,”...
KEY TERMS
employee compensation
direct financial payments
indirect financial payments
Davis-Bacon Act (1931)
Walsh-Healey ...
Human Resource
Management
ELEVENTH EDITION

1

GARY DESSLER

Part 4 | Compensation

Appendix for
Chapter 11

Quantitative ...
Quantitative Job Evaluation Methods
• Factor Comparison Job Evaluation Method
Step 1. Obtain job information
Step 2. Selec...
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HRM Dessler CH# 11

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HRM Dessler CH# 11

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HRM Dessler CH# 11

  1. 1. Human Resource Management 1 ELEVENTH EDITION GARY DESSLER Part 4 | Compensation Chapter 11 Establishing Strategic Pay Plans © 2008 Prentice Hall, Inc. All rights reserved. PowerPoint Presentation by Charlie Cook The University of West Alabama
  2. 2. After studying this chapter, you should be able to: 1. List the basic factors in determining pay rates. 2. Explain in detail how to establish pay rates. 3. Explain how to price managerial and professional jobs. 4. Discuss competency-based pay and other current trends in compensation. © 2008 Prentice Hall, Inc. All rights reserved. 11–2
  3. 3. Basic Factors in Determining Pay Rates Employee Compensation Direct Financial Payments © 2008 Prentice Hall, Inc. All rights reserved. Indirect Financial Payments 11–3
  4. 4. Legal Considerations in Compensation Davis-Bacon Act (1931) Equal Pay Act (1963) Walsh-Healey Public Contract Act (1936) Employee Retirement Income Security Act (ERISA) Title VII of the 1964 Civil Rights Act Employee Compensation Age Discrimination in Employment Act Fair Labor Standards Act (1938) Americans with Disabilities Act The Family and Medical Leave Act The Social Security Act of 1935 (as amended) Workers’ Compensation © 2008 Prentice Hall, Inc. All rights reserved. 11–4
  5. 5. Equity and Its Impact on Pay Rates Forms of Equity External Equity Internal Equity © 2008 Prentice Hall, Inc. All rights reserved. Individual Equity Procedural Equity 11–5
  6. 6. Addressing Equity Issues Salary Surveys Methods to Address Equity Issues Job Analysis and Job Evaluation Performance Appraisal and Incentive Pay Communications, Grievance Mechanisms, and Employees’ Participation © 2008 Prentice Hall, Inc. All rights reserved. 11–6
  7. 7. The Salary Survey Step 1. The Wage Survey: Uses for Salary Surveys To price benchmark jobs To marketprice wages for jobs © 2008 Prentice Hall, Inc. All rights reserved. To make decisions about benefits 11–7
  8. 8. Sources for Salary Surveys Sources of Wage and Salary Information Employer SelfConducted Surveys Consulting Firms Professional Associations © 2008 Prentice Hall, Inc. All rights reserved. Government Agencies 11–8 The Internet
  9. 9. Establishing Pay Rates (cont’d) Skills Step 2. Job Evaluation: Identifying Compensable Factors Effort Responsibility Working Conditions © 2008 Prentice Hall, Inc. All rights reserved. 11–9
  10. 10. Establishing Pay Rates (cont’d) Methods for Evaluating Jobs Ranking Job Classification © 2008 Prentice Hall, Inc. All rights reserved. Point Method Factor Comparison 11–10
  11. 11. Establishing Pay Rates (cont’d) Point Method Step 3. Group Similar Jobs into Pay Grades Ranking Method Classification Methods © 2008 Prentice Hall, Inc. All rights reserved. 11–11
  12. 12. Pricing Managerial and Professional Jobs Compensating Executives and Managers Base Pay Short-term Incentives © 2008 Prentice Hall, Inc. All rights reserved. Long-Term Incentives Executive Benefits and Perks 11–12
  13. 13. Competency-Based Pay (cont’d) Why Use CompetencyBased Pay? Support HighPerformance Work Systems Support Strategic Aims © 2008 Prentice Hall, Inc. All rights reserved. Support Performance Management 11–13
  14. 14. Other Compensation Trends • Broadbanding  Consolidating salary grades and ranges into just a few wide levels or “bands,” each of which contains a relatively wide range of jobs and salary levels.  Pro and Cons  More flexibility in assigning workers to different job grades.  Provides support for flatter hierarchies and teams.  Promotes skills learning and mobility.  Lack of permanence in job responsibilities can be unsettling to new employees. © 2008 Prentice Hall, Inc. All rights reserved. 11–14
  15. 15. KEY TERMS employee compensation direct financial payments indirect financial payments Davis-Bacon Act (1931) Walsh-Healey Public Contract Act (1936) Title VII of the 1964 Civil Rights Act Fair Labor Standards Act (1938) Equal Pay Act (1963) Employee Retirement Income Security Act (ERISA) salary compression salary survey benchmark job job evaluation © 2008 Prentice Hall, Inc. All rights reserved. compensable factor ranking method job classification (or grading) method classes grades grade definition point method factor comparison method pay grade wage curve pay ranges competency-based pay competencies broadbanding comparable worth 11–15
  16. 16. Human Resource Management ELEVENTH EDITION 1 GARY DESSLER Part 4 | Compensation Appendix for Chapter 11 Quantitative Job Evaluation Methods © 2008 Prentice Hall, Inc. All rights reserved. PowerPoint Presentation by Charlie Cook The University of West Alabama
  17. 17. Quantitative Job Evaluation Methods • Factor Comparison Job Evaluation Method Step 1. Obtain job information Step 2. Select key benchmark jobs Step 3. Rank key jobs by factor Step 4. Distribute wage rates by factors Step 5. Rank key jobs according to wages assigned to each factor Step 6. Compare the two sets of rankings to screen out unusable key jobs Step 7. Construct the job-comparison scale Step 8. Use the job-comparison scale © 2008 Prentice Hall, Inc. All rights reserved. 11–17

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